Misclassification—meaning putting employees in the wrong box, so to speak, regarding whether they are entitled to overtime—is the biggest issue facing the club industry, says Jeffrey Ruzal, senior counsel in the labor and employment practice of New York City-based law firm Epstein Becker Green. …

Workers exempt from FLSA stipulations are those paid on salary. In the club industry, these employees often fall under the so-called administrative exemption, commonly white-collar jobs at a gym's corporate headquarters. Another exemption often seen in the club industry is the executive exemption, reserved for managers and higher-level supervisors acting at a higher level, using judgment with regard to independent operations. Ruzal notes that such definitions still leave room for interpretation.

"This one is murky, and sometimes employers get it very wrong," he says. "Executive exemption employees have to interview, hire and fire, promote and discipline—the host of managerial decision-making. This is not for someone who is a team lead or runs a shift or something." …

"Employers have to be very careful that adding a couple of managerial responsibilities onto someone mostly doing hourly type duties is not going to save them from having to pay overtime," Ruzal says.

For an added layer of protection, he adds, all signed offer letters should include the same in-depth job description.